(Reuters) - Gold prices rallied to record highs on Thursday for a fifth straight session and silver soared, as the dollar index tumbled for a third day, prompting investors to buy bullion as a currency hedge.

Gold, which jumped above $1,500 an ounce for the first time on Wednesday, once again rose in tandem with riskier assets such as equities on inflation fears.

"The driving factor is currency uncertainty. The dollar index is down again, so the inflation factor is creeping into the market," said Bill O'Neill, partner of commodity firm LOGIC Advisers.

A weaker dollar means Americans will have to pay more for imports, which can feed inflation.

Spot gold rose 0.5 percent to $1,505.34 an ounce by 12:21 p.m. ET, after hitting a record $1,508.75 an ounce. U.S. gold futures for June delivery rose $7 an ounce to $1,505.90.

Silver gained 1.6 percent to $45.93 an ounce. U.S. silver futures trade was active, with volume approaching 150,000 lots, set to be one of the busiest sessions in 2011.

The gold/silver ratio -- which shows how much silver an ounce of gold can buy -- is set to fall for a ninth consecutive session to below 33, a 28-year low.

"Silver continues to attract huge speculative interest. Even though silver is outperforming gold, the genesis of this rally is still related to the flight-to-safety factors supporting gold," O'Neill said.

GOLD AS CURRENCY HEDGE

Gold also benefits as a hedge against U.S. currency depreciation, as the dollar tumbled for the third straight day as super-low interest rates and the crushing weight of a massive budget deficit pushed the greenback closer to an all-time low against a basket of major currencies.

Gold prices have risen more than 5 percent so far this month and are on track for a sixth straight week of gains, reflecting strength across the commodity markets.

The Reuters-Jeffries CRB index, a global benchmark for commodities, rose further on Thursday after notching its biggest one-day gain in two weeks in the previous session.

Investors have rushed into risky assets due to strong U.S. corporate earnings and signs the global economy is chugging along even as the Federal Reserve stays very cautious about when it will start to unwind its super-loose policy.

(Additional reporting by Jan Harvey in London; Editing by David Gregorio)